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HMRC internal manual

International Manual

HM Revenue & Customs
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UK residents with foreign income or gains: corporation tax: Non-trading loan relationships: pooling of credits and debits

In the case of non-trading loan relationships, both UK source and foreign source interest are dealt with in a single ‘pot’; and the total of the debits is set against the total of the credits to arrive at a single figure of profit or a single figure of deficit.

If there is a profit it cannot be identified with any of the component parts of the various credits that have gone into the ‘pot’ and whose separate identity is therefore lost. This makes it difficult to identify and quantify the amount of UK tax payable in respect of a particular item of interest which has suffered foreign tax for which credit relief is claimed. If there is a deficit on the ‘pot’, the effect of the decision in George Wimpey International Ltd v Rolfe (62TC597 - see INTM163040) would be that credit relief could not be allowed, even if on the same figures it would have been available under the old rules when foreign source interest which was not a trading receipt was assessed separately under what was then Cases IV and V. Various sections within TIOPA10 address this including Section 42, 50, 54,55 (INTM167090) & Section 49B (INTM167225) as well as Sections 108 - 110 (INTM167210 onwards).